IRS Says FedEx Misclassified Workers
December 24, 2007 (PLANSPONSOR.com) - FedEx Corp.
reported last week that the Internal Revenue Service thinks
some 13,000 owner-operators at the package delivery firm have
been misclassified as independent contractors.
According to a
filing
with the Securities and Exchange Commission (SEC), FedEx
said the IRS has tentatively concluded, subject to further
discussion with the firm, that FedEx Ground's
pick-up-and-delivery owner-operators should be reclassified
as employees for federal employment tax purposes.
Moreover, FedEx said the IRS has indicated that it
anticipates assessing tax and penalties of $319 million
plus interest for 2002.
It also said "similar issues" are under audit by the IRS
for calendar years 2004 through 2006.
"We believe that we have strong defenses to the IRS's
tentative assessment and will vigorously defend our
position, as we continue to believe that FedEx Ground's
owner-operators are independent contractors," FedEx said in
the filing. "Given the preliminary status of this matter,
we cannot yet determine the amount or a reasonable range of
potential loss," the company noted.
Nevin E. Adams
editors@plansponsor.com